The #1 problem CEOs have with measuring their strategic priorities.

It’s time again for the quarterly strategy review meeting and the executive team has gathered to discuss progress. Most CEOs have become used to receiving the following report-outs:

A financial report comparing standard financial measures from this quarter to previous quarter and to the same quarter last year

A round of good news about the major action items that have been completed or business won

And some major action items that are not “on-track” because the VP intimates the team needs more time and money.

But something nags at the CEO as she receives this same information again this quarter. “Do I really know how my organization is performing? Financial metrics are crucial, but our strategy has other performance improvement areas and I don’t feel like I know if we are really making progress. We are getting lots done, but are we having an impact on the changes we need? Are our KPIs really telling me the performance story I need to know? Or am I just getting a good news story every quarter? What am I missing?”

So what’s the CEO’s biggest problem with measuring their strategic priorities?

In this quarterly review session, the CEO’s biggest problem with measuring her strategic priorities shows up as a lack of statistically sound evidence that she can trust to answer her questions about progress on the company’s strategy and then make decisions from.

Questions such as:

Are we reducing costs in our supply chain?

Is our product development getting better?

Is our customer retention really improving?

Is our team productivity increasing?

Are our employees engaged in their work?

How reliable is our delivery service?

How will we know if our customer experience is frustrating our customers?

CEOs want to be able to see signals of how the organization is performing over time.

A lack of evidence is a symptom, not the cause

In our workplaces, it is common to address the symptoms that show up, instead of taking a pause to figure out the root cause of the problem. Does your organization lack statistically sound evidence that tells a performance story? If yes, then it is time to ask Why?

Why don’t we have meaningful performance measures that are aligned with our strategy, and why don’t we have data we can trust to prove if we are making progress?

Are seemingly immeasurable goals your root cause?

Most organizations’ strategic plans are filled with corporate jargon, fuzzy language, weasel words and vague ideals. It is common practice, but it’s a bad habit that will cause organizations to struggle to execute and struggle to find meaningful measures.

Here are some examples pulled out of real-life businesses’ strategic plans:

Become the industry leader in customer service excellence

Improve employee engagement

Ensure all our satellite offices are financially sustainable

Enhance new customer growth and development

People performance and development

The problem is the leaders see their goals as immeasurable. They believe the goal is too complex or just too “high-level” to be measured.

But that isn’t the problem. You can measure anything when given the right process.

The biggest problem the CEO has when measuring their strategic priorities is how CEOs write their strategic goals in the first place.

You can’t find meaningful measures for something you can’t observe occurring in the real world. When executives write their plans with weasel words, vagueness and lack of results-orientation, they will fail to design meaningful measures and therefore fail to get the evidence they need to assess their progress.

It is easy for a CEO to demand better measures of the executive team, but it is unlikely that better measures will appear unless they do something differently.

Not what we want to do or improve, but why we want to do this action or this improvement. What would be different from today?

Not a bunch of vague concepts bundled together, but what specifically do we mean in plain language. If we take an example from above, what do we want to specifically achieve when a customer “develops” or when a customer “grows”?

As leaders, your job is to reduce the complexity by making goals easier to understand. So try writing them in plain language that evokes the real world.

Here are some examples of plain language results using the same example from above:

What is the result the CEO wants from “customer development”?

Existing customers spend more money with us?

Existing customers buy other products from us that they haven’t purchased before?

Existing customers refer other departments or clients to us?

What is the result the CEO wants from “customer growth”?

We get more new customers?

We get more new customers with budgets over $100,000?

More of our proposals convert into new customer contracts?

We gain more new customers than we lose?

Existing “free service” customers convert to “paying customers”?

Which is it?

These de-weaseling conversations are some of the most strategic ones an executive team can have because they must make very specific decisions and agree on what success truly looks like.

Once the executive team has become this specific and clear on what they want to achieve, their performance measurement process is off to a much stronger start.

Now, how do executive teams take the result and turn it into statistically sound evidence?